"They were dating." While they weren't serious, Heath liked MK's sense of humor. "Heath was amused by this teeny little thing bursting with nervous energy and smoking like a chimney," a pal says. But there was also a dark side to their chemistry. "To put it bluntly, both of them had a mutual interest in partying," says the insider. "She could drink a lot for someone her size," says a friend who partied with her at Hyde and Les Deux in LA. At the Sundance Film Festival in Utah in January, witnesses tell In Touch that Mary-Kate was chain-smoking, downed seven beers in two hours and fell down at a party hosted by 5WR and Butter. "She was so drunk," an onlooker says. "She could barely stand up."